Moving to the United States, 101

In August 2020, I moved to the United States of America. This is a living document of everything I had to deal with and all the advice I have received from other expats.

Since I talk a bit about personal finance and retirement account types, I wanted to be clear that nothing you read is meant to be financial advice. Please do your research and spend time familiarizing yourself with the principles of personal finance in the US.

Social Security Number

Your Social Security Card will be sent to your address with the USCIS, or you will need to go to the Social Security Administration. If you aren’t sure if this will be mailed to you, it's better to go to the Administration because you will need this for everything, like opening a bank account, applying for a driver’s license, submitting your pay/tax information to your employer and so on.

Finances

Opening a Bank Account

I’ve opened accounts with multiple banks, and the service is more or less similar. Do your research and ask the opinion of others around you. You’ll need your Social Security Number (SSN) and two government-issued IDs if you go to a bank. You can also open bank accounts online.

There are often cash reward offers for people opening their first account with a bank, so make sure you take advantage of that if you can.

Credit Score/ Credit History

Your credit score is proof that you’re good with money. You will need a credit history to take out a car loan, apply for a credit card, and even rent an apartment. To build a credit history in the beginning, you need a credit card. As you can see, we have a chicken and egg problem. However, there is a way to get a credit score with a clean slate. The answer is a secured credit card. A secured credit asks you for a security deposit, which becomes your credit limit. After about eight or so months, they check your transaction history, and based on that, they return your deposit and give you a line of credit. I used Discover’s secure credit card, but I will advise you to research.

Avoid Loans

If you haven’t experienced capitalism to a degree found in the US (I would be surprised if you have), you will quickly realise how easy it is to acquire debt.

You will find buy now pay later schemes for everything you want to buy. I don’t want to teach you how to manage your finances but stay away. It's a slippery slope. Car and house loans are the only two types of necessary loans.

Tipping

They say tipping is optional, but it's not. It's 20% of the bill. I’ve been chased out of the restaurant by a manager asking, “Sir, was something wrong with the service? The tip amounts are written on the receipt.” That happened even though the gratuity was included in the bill.

Getting Paid

It is standard to get paid bi-monthly in the US. I’ve only worked in Pakistan and Germany; in both counties, getting paid in full around the 1st of each month is the norm. Getting paid once a month makes sense because all your bills are due in full at the beginning of the month. Getting your entire salary also lets you budget well and not overspend, so I was surprised with the bi-monthly paydays, but that’s just how it is.

If you start getting a salary before you have a bank account, you will get a cheque in the mail.

Taxes

Paying taxes is serious and complicated. You should go to a tax accountant or use one of the online services like Turbo Tax or HR Block.

You will get tax documents from your employer, investment accounts, HSA account (if you have one) etc. It's a good idea to keep your important receipts for three years in case you get audited by the IRS.

Turbo Tax Referral Link: https://turbo.tax/d3xz3pet

Work

You or your employer can terminate a work contract without any prior notice. A two-week notice is a standard courtesy.

Negotiating Work Contracts

Always negotiate your salary package. Many jobs have a range, even if they don’t tell you. Never quote your salary expectations; always ask for a range first.

Sometimes employers have relocation allowances. Always ask if they have one. Some companies even help you find an apartment.

Driving

Public transportation is quite limited in most American cities. There is a good chance you will need a car soon after arriving.

Getting your License

The Department of Motor Vehicles (DMV) issues licenses and identification cards. Getting a license is quite straightforward. You study the DMV handbook, pay a fee and attempt the multiple-choice test. When you pass, you get a learner’s permit. You then have to attempt a road test, and if you pass that, you get your license in the mail in a few weeks. It's okay if you fail either of the tests, everyone does, and you can always try again.

If you have your country’s driver's license, check if that is accepted as a valid license in the US. You can sometimes drive for up to six months using a foreign driver’s license. In my case, I had to get an international driver’s license from Pakistan specifically.

Buying a Car

The scammy car salesman stereotype that you see in Hollywood movies holds up. If you go to a dealership, the salesperson will try to give you a bad deal and sell you useless add-ons like tyre insurance, weather protection, etc. If you can, go to the dealership on the last day of the month or the last day of the year. You will have more leverage that way.

Do your research before you go. Car websites show how much you need to pay based on your credit score, car price, etc. Keep these estimates in mind before you go to a dealership. Don’t quote a price first, no matter how much the salesperson forces you and be aware that they will push you very hard. Pretend you know nothing about the car market since you are new in the U.S. Don’t be afraid to walk away if you think you’re not getting a good deal. There are many dealerships and many companies. If you can buy a car online, trust me, that will save you a lot of time and energy.

Tesla referral link: https://ts.la/raheel135048

Health Insurance

The U.S. health insurance is unnecessarily complicated to the point of being infuriating. But it is very important that you know everything there is to know about your insurance policy. Usually, your employer will offer you insurance.

When choosing your insurance, you will be confronted by terms such as copay, deductible, out-of-pocket, network coverage etc. The insurance provider’s website, policy booklets and other sources on the internet will give you a good idea of what all of these mean. These terms are a part of what makes American health insurance so complicated, but it is essential to know what they mean.

PPO vs HMO

PPO has a higher premium, but doctor fees cost less. HMO has a lower monthly premium, but doctor visits cost more.

You can open a Health Savings Account (HSA) if you have a high-deductible HMO plan. This account can only be used for medical expenses such as doctor fees, prescriptions etc. You can contribute a portion of your gross salary (pre-tax) to this account every pay period. That is a good thing because that way, you don’t pay taxes on your medical expenses. There is a limit to how much you can contribute per year.

You can open a Flexible Spending Account (FSA) if you have a PPO account. An FSA is functionally the same as an HSA, but there is a catch. You only contribute to the FSA at the beginning of the year and need to predict how much you might spend in the coming year. If money is left over at the end of the year, only a limited portion will roll over to the next year; the bank will take the rest of that money away from you. You read that right, so take out your crystal ball or contact your nearest psychic.

Retirement Accounts

401(k)

Don’t let the name scare you. A 401(k) is just a retirement account that some employers offer. You can choose how much of your gross salary each pay period will be deposited into that account.

Some employers even match your contributions, so if you deposit $100, they will also deposit $100. This matched amount has a limit, of course. Some employers also match a percentage based on your total tenure at the company each year.

Your 401(k) money is automatically invested into stocks and bonds. Companies that offer these accounts act as your financial advisors, and they take a pretty hefty cut for that service. It's a good idea to look at your 401(k) investment portfolio.

IRA

An individual Retirement Account (IRA) is a retirement account you open yourself. Like the 401(k), you contribute a part of your gross salary into this account. You can choose to invest that contribution into any stocks you want.

Roth IRA

This is also an IRA account, but the difference is that you contribute net salary instead of gross. You can only contribute to a Roth IRA if your salary is below a certain amount. You can find that on the IRS website. If you are eligible for a Roth IRA, please open one as soon as possible. Your profits from the investment are not taxed. There is a per annum limit to how much you can contribute to IRAs.

Leasing an Apartment

Finding an Apartment

Signing a 1-year lease when renting an apartment is normal. In most cases, you can also have a month-to-month contract, but the rent is always higher in those cases.

In most cases, you will be asked for a credit report. Landlords do that to ensure they can depend upon you to pay the rent. Since you just moved to the US, you won’t have a credit score, so you can show them an offer letter or work contract showing your compensation. Your rent should be no more than 30% of your gross income.

Check out websites like Zillow, Redfin and Apartments.com. I’ve had the most luck with Zillow. In my experience, finding a place to rent in the summer is more challenging. The rents are also generally higher.

Sometimes you will see offers for a free couple of weeks when you sign a 1-year lease. See if you can take advantage of one of those offers. Every time you renew your lease, the rent usually goes higher (3% on average). Factor that in if you’re expecting to stay at an apartment long-term.

Mobile Phone Connection

I live in California, and I’ve had a good experience with the T-Mobile network. Do your own research to check which service provider has the best service in your area.

Here is an affiliate link for Mint Mobile, which uses the T-Mobile network but is cheaper: http://fbuy.me/usCZk

Miscellaneous Advice

Get a Costco Membership

If you’re a family of two or more, get a Costco membership right away. If there isn’t a Costco in your city, consider Sam’s Club or other wholesale stores. You might read the word “wholesale” and think I don’t need to shop from a wholesale store but trust me, you do.

During our first week, we got a Costco membership, and I’m glad we did because we could buy dozens of things we needed from a single store, and we probably saved more than a hundred dollars. Things like a complete set of pots and pans, knives, a monitor, trash bags, cleaning supplies, Tupperware, some food items, detergent, toiletries etc. Three years later, we still use some consumable items (trash bags, cleaning supplies). My wife and I sometimes joke that shopping at Costco lets you buy a lifetime supply of certain things.